India proposes ‘Oil for Drug Barter Plan’ to Venezuela
Venezuela is tapping its massive oil reserves in order to pay India back for the pharmaceuticals it gave the socialist South American country.
The Venezuelan government does not have the cash on hand to fund its publicly-run hospitals or import drugs because of hyperinflation and low global oil prices. Venezuela is currently short on medicine, food and electricity, despite having the world’s largest proven crude oil reserves.
India is a global leader of generic pharmaceutical production, and some of the country’s biggest firms are tied up in bad deals with Venezuela.
Indian officials say they have proposed an oil-for-drugs barter plan with cash-strapped Venezuela to recoup millions of dollars in payments owed to some of India’s largest pharmaceutical companies. Several of India’s generics producers, led by the country’s second-largest player Dr Reddy’s Laboratories Ltd , bet heavily on Venezuela as they sought emerging market alternatives to slower-growing economies such as the United States .
But the unraveling of Venezuela’s socialist economy amid a fall in oil prices has triggered triple-digit inflation and a full-blown political and financial crisis. Unable to pay its bills, the country is facing severe shortages of even
basic supplies such as food, water and medicines.Dr Reddy’s wrote off $65 million in the March quarter, which it said was almost all the money it was owed from Venezuela. Rival Glenmark Pharmaceuticals Inc, another major investor, says it is due $45 million.
“At this point, even if our companies get back 5 or 10 percent of the payment they are owed, they would be satisfied.”
India, one of the world’s biggest oil importers along with the United States and China, had similarly elaborate barter deals with Iran, swapping rice and wheat for oil.
The officials said Venezuela had been receptive to the plan “in principle”, but not made any concrete commitments yet.
Indian officials said a “high level” meeting with Venezuela was due in the coming months to discuss the proposed deal.
“The finance ministry has assured us that the government is fully committed to it, but it will take time,” said P.V. Appaji, Director General of the Pharmaceutical Export Promotion Council of India, a body under the country’s commerce ministry.
